To insure or not to insure. AI is creating new professional liability exposure and risks that boards and insurers are struggling to understand and…

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To insure or not to insure. AI is creating new professional liability exposure and risks that boards and insurers are struggling to understand and price. AI is creating a broad range of risks. AI is raising concerns about data ownership and is an increasing threat to corporate security through agentic AI adoption. AI hallucinations are demonstrated to be creating issues if left unchecked. AI is being used by threat actors to automate cyber attacks by bypassing conventional security capabilities without human intervention.

“With respect to cyber, AI use raises major questions around data governance and privacy breaches, which may trigger privacy or regulatory liability rather than classic PI/E&O claims,” Grimshaw said.

These issues are increasing the risk profile of covered companies, and along with the fiduciary responsibilities the board carries for risk mitigation, professional liability is now becoming a question that insurers are raising concerns about.

“Poor AI governance and internal controls could lead to compliance-driven claims or regulatory fines with respect to the handling or indeed mishandling of client data.”

The AI insurance debate is a complex one, and it’s moving quickly. Far quicker than the comparable cyber insurance debate has been moving. AI is also moving far quicker than boards can adapt to change, and if insurers do start to pull out of the AI insurance market, AI (and cyber) risk transfer will move fully onto the balance sheet, as a board risk issue.

@Thaddeus Dziekanowski Brian D. McCarthy

@Parava Security Solutions

#artificalintelligence #ai

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